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Employee Benefits (Tables)
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Expense recognized for defined contribution savings plans, included in compensation and benefits and discontinued operations in the consolidated statements of income The expense for the significant plans in the U.S., U.K., Netherlands and Canada is as follows (in millions):
Years ended December 31
2019
 
2018
 
2017
U.S.
$
98

 
$
98

 
$
105

U.K.
41

 
45

 
43

Netherlands and Canada
25

 
25

 
25

Total
$
164

 
$
168

 
$
173


Changes in Projected Benefit Obligations Fair Value of Plan Assets, Funded Status and Amount Recognized
The following tables provide a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended December 31, 2019 and 2018, and a statement of the funded status as of December 31, 2019 and 2018, for Aon’s significant U.K., U.S., and other major pension plans, which are located in the Netherlands and Canada. These plans represent approximately 91% of the Company’s projected benefit obligations.
 
U.K.
 
U.S.
 
Other
(millions)
2019

2018
 
2019
 
2018
 
2019
 
2018
Change in projected benefit obligation
 
 
 
 
 
 
 
 
 
 
 
At January 1
$
4,129

 
$
4,893

 
$
2,877

 
$
3,155

 
$
1,271

 
$
1,401

Service cost
—

 
—

 
—

 
—

 
—

 
—

Interest cost
109

 
109

 
108

 
99

 
27

 
27

Plan amendment
10

 
13

 
—

 
—

 
—

 
—

Settlements
(22
)
 
(176
)
 
—

 
—

 
—

 
—

Actuarial loss (gain)
594

 
(297
)
 
373

 
(221
)
 
177

 
(47
)
Benefit payments
(168
)
 
(160
)
 
(166
)
 
(156
)
 
(42
)
 
(43
)
Foreign currency impact
127

 
(253
)
 
—

 
—

 
(8
)
 
(67
)
As of December 31
$
4,779

 
$
4,129

 
$
3,192

 
$
2,877

 
$
1,425

 
$
1,271

Accumulated benefit obligation at end of year
$
4,779

 
$
4,129

 
$
3,192

 
$
2,877

 
$
1,391

 
$
1,247

Change in fair value of plan assets
 
 
 
 
 
 
 
 
 
 
 
At January 1
$
5,225

 
$
5,906

 
$
1,796

 
$
1,958

 
$
1,155

 
$
1,256

Actual return on plan assets
687

 
(125
)
 
398

 
(141
)
 
182

 
(19
)
Employer contributions
78

 
97

 
38

 
135

 
19

 
20

Settlements
(22
)
 
(176
)
 
—

 
—

 
—

 
—

Benefit payments
(168
)
 
(160
)
 
(166
)
 
(156
)
 
(42
)
 
(43
)
Foreign currency impact
159

 
(317
)
 
—

 
—

 
(11
)
 
(59
)
As of December 31
$
5,959

 
$
5,225

 
$
2,066

 
$
1,796

 
$
1,303

 
$
1,155

Market related value at end of year
$
5,959

 
$
5,225

 
$
1,969

 
$
1,981

 
$
1,303

 
$
1,155

Amount recognized in Statement of Financial Position as of December 31
 
 
 
 
 
 
 
 
 
 
 
Funded status
$
1,180

 
$
1,096

 
$
(1,126
)
 
$
(1,081
)
 
$
(122
)
 
$
(116
)
Unrecognized prior-service cost
40

 
30

 
1

 
3

 
(6
)
 
(7
)
Unrecognized loss
1,204

 
1,106

 
1,762

 
1,705

 
460

 
440

Net amount recognized
$
2,424

 
$
2,232

 
$
637

 
$
627

 
$
332

 
$
317


The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2019 and 2018 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):
 
2019
 
2018
Accumulated projected benefit obligation
$
103

 
$
91

Fair value of plan assets
16

 
14

Funded status
(87
)
 
(77
)
Unrecognized prior-service credit
(1
)
 
(1
)
Unrecognized (gain) loss
3

 
(6
)
Net amount recognized
$
(85
)
 
$
(84
)
Amounts recognized in the Consolidated Statements of Financial Position
Amounts recognized in the Consolidated Statements of Financial Position consist of (in millions):
 
U.K.
 
U.S.
 
Other
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Prepaid benefit cost (1)
$
1,200

 
$
1,113

 
$
—

 
$
—

 
$
—

 
$
—

Accrued benefit liability - current (2)
(1
)
 
(1
)
 
(50
)
 
(46
)
 
(5
)
 
(5
)
Accrued benefit liability - non-current (3)
(19
)
 
(16
)
 
(1,076
)
 
(1,035
)
 
(117
)
 
(111
)
Accumulated other comprehensive loss
1,244

 
1,136

 
1,763

 
1,708

 
454

 
433

Net amount recognized
$
2,424

 
$
2,232

 
$
637

 
$
627

 
$
332

 
$
317


(1)
Included in Prepaid pension
(2)
Included in Other current liabilities
(3)
Included in Pension, other postretirement, and postemployment liabilities
Amounts recognized in Accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost
Amounts recognized in Accumulated other comprehensive loss (income) that have not yet been recognized as components of net periodic benefit cost at December 31, 2019 and 2018 consist of (in millions):
 
U.K.
 
U.S.
 
Other
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Net loss
$
1,204

 
$
1,106

 
$
1,762

 
$
1,705

 
$
460

 
$
440

Prior service cost (income)
40

 
30

 
1

 
3

 
(6
)
 
(7
)
Total
$
1,244

 
$
1,136

 
$
1,763

 
$
1,708

 
$
454

 
$
433


Components of net periodic benefit cost for the pension plans
Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
 
U.K.
 
U.S.
 
Other
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Interest cost
109

 
109

 
123

 
108

 
99

 
96

 
27

 
27

 
26

Expected return on plan assets, net of administration expenses
(191
)
 
(192
)
 
(199
)
 
(136
)
 
(144
)
 
(140
)
 
(40
)
 
(45
)
 
(47
)
Amortization of prior-service cost
1

 
1

 
1

 
2

 
2

 
2

 
—

 
—

 
—

Amortization of net actuarial loss
29

 
28

 
31

 
53

 
59

 
50

 
12

 
12

 
11

Net periodic benefit (income) cost
(52
)
 
(54
)
 
(44
)
 
27

 
16

 
8

 
(1
)
 
(6
)
 
(10
)
Settlement expense
5

 
37

 
125

 
—

 
—

 
—

 
—

 
—

 
—

Total net periodic benefit cost (income)
$
(47
)
 
$
(17
)
 
$
81

 
$
27

 
$
16

 
$
8

 
$
(1
)
 
$
(6
)
 
$
(10
)
Weighted-average assumptions used to determine future benefit obligations and net periodic benefit cost
The weighted-average assumptions used to determine benefit obligations are as follows:
 
U.K.

U.S. (1)

Other
 
2019

2018

2019

2018

2019

2018
Discount rate
2.09%

2.95%

2.72 - 3.17%

3.92 - 4.26%

0.91 - 3.10%

1.89 - 3.88%
Rate of compensation increase
3.24 - 3.74%

3.73 - 4.23%

N/A

N/A

1.00 - 3.00%

1.00 - 3.00%
Underlying price inflation
1.78%

1.88%

N/A

N/A

2.00%

2.00%
(1)
U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation.
The weighted-average assumptions used to determine the net periodic benefit cost are as follows:
 
U.K.

U.S.

Other
 
2019

2018

2017

2019

2018

2017

2019

2018

2017
Discount rate
2.95%

2.63%

2.77%

3.92 - 4.26%

3.27 - 3.61%

3.53 - 4.11%

1.89 - 3.88%

1.78 - 3.39%

1.85 - 3.81%
Expected return on plan assets, net of administration expenses
3.64%

3.34%

3.36%

7.05%

7.71%

7.88%

2.50 - 4.10%

1.70 - 4.85%

2.68 - 5.15%
Rate of compensation increase
3.73 - 4.23%

3.70 - 4.20%

3.70 - 4.20%

N/A

N/A

N/A

1.00 - 3.00%

1.00 - 3.00%

1.00 - 3.50%
Fair values of pension plan assets
The fair values of the Company’s other major pension plan assets at December 31, 2019 and December 31, 2018, by asset category, are as follows (in millions):
 
 
 
Fair Value Measurements Using
 
Balance at December 31, 2019
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
5

 
$
5

 
$
—

 
$
—

Equity investments:
 
 
 
 
 
 
 
Pooled funds (2)
323

 
—

 
—

 
—

Fixed income investments:
 
 
 
 
 
 
 
Pooled funds (2)
907

 
—

 
—

 
—

Other investments:
 
 
 
 
 
 
 
Alternative investments (2) (3)
62

 
—

 
—

 
—

Real estate (2) (4)
6

 
—

 
—

 
—

Total
$
1,303

 
$
5

 
$
—

 
$
—

(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of limited partnerships, private equity, and hedge funds.
(4)
Consists of property funds and trusts holding direct real estate investments.
 
 
 
Fair Value Measurements Using
 
Balance at December 31, 2018
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
10

 
$
10

 
$
—

 
$
—

Equity investments:
 
 
 
 
 
 

Pooled funds (2)
281

 
—

 
—

 
—

Fixed income investments:
 
 
 
 
 
 
 
Derivatives
9

 
—

 
9

 
—

Pooled funds (2)
782

 
—

 
—

 
—

Other investments:
 
 
 
 
 
 
 
Alternative investments (2) (3)
63

 
—

 
—

 
—

Real estate (2) (4)
10

 
—

 
—

 
—

Total
$
1,155

 
$
10

 
$
9

 
$
—


(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of limited partnerships, private equity, and hedge funds.
(4)
Consists of property funds and trusts holding direct real estate investments.
The fair values of the Company’s major U.K. pension plan assets at December 31, 2019 and December 31, 2018, by asset category, are as follows (in millions):
 
 
 
Fair Value Measurements Using
 
Balance at December 31, 2019
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
81

 
$
81

 
$
—

 
$
—

Equity investments:
 
 


 

 

Pooled funds (2)
119

 
—

 
—

 
—

Fixed income investments:
 
 

 

 

Derivatives (3)
(1,205
)
 
—

 
(1,205
)
 
—

Government and agency bonds
2,667

 
2,667

 
—

 
—

Annuities
1,849

 
—

 
—

 
1,849

Pooled funds (2)
1,486

 
—

 
—

 
—

Other investments:

 

 

 

Real estate (2) (4)
180

 
—

 
—

 
—

Alternative investments (2) (5)
782

 
—

 
—

 
—

Total
$
5,959

 
$
2,748

 
$
(1,205
)
 
$
1,849

(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of equity securities and equity derivatives, including repurchase agreements.
(4)
Consists of property funds and trusts holding direct real estate investments.
(5)
Consists of limited partnerships, private equity, and hedge funds.
 
 
 
Fair Value Measurements Using
 
Balance at December 31, 2018
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
96

 
$
96

 
$
—

 
$
—

Equity investments:
 
 
 
 
 
 
 
Pooled funds (2)
212

 
—

 
—

 
—

Fixed income investments:
 

 


 


 


Derivatives (3)
(949
)
 
—

 
(949
)
 
—

Corporate bonds
367

 
—

 
367

 
—

Government and agency bonds
2,079

 
2,079

 
—

 
—

Annuities
1,688

 
—

 
—

 
1,688

Pooled funds (2)
889

 
—

 
—

 
—

Other investments:
 
 
 
 
 
 
 
Real estate (2) (4)
149

 
—

 
—

 
—

Alternative investments (2) (5)
694

 
—

 
—

 
—

Total
$
5,225

 
$
2,175

 
$
(582
)
 
$
1,688


(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of equity securities and equity derivatives, including repurchase agreements.
(4)
Consists of property funds and trusts holding direct real estate investments.
(5)
Consists of limited partnerships, private equity, and hedge funds.
The fair values of the Company’s U.S. pension plan assets at December 31, 2019 and December 31, 2018, by asset category, are as follows (in millions):
 
 
 
Fair Value Measurements Using
Asset Category
Balance at December 31, 2019
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
77

 
$
77

 
$
—

 
$
—

Equity investments:
 
 
 
 
 
 
 
Equity securities
195

 
195

 
—

 
—

Equity derivatives
22

 
—

 
22

 
—

Pooled funds (2)
583

 
—

 
—

 
—

Fixed income investments:
 
 
 
 
 
 
 
Corporate bonds
128

 
—

 
128

 
—

Government and agency bonds
199

 
162

 
37

 
—

Asset-backed securities
3

 
—

 
3

 
—

Pooled funds (2)
545

 
—

 
—

 
—

Other investments:
 
 
 
 
 
 
 
Real estate (2) (3)
133

 
—

 
—

 
—

Alternative investments (2) (4)
181

 
—

 
—

 
—

Total
$
2,066

 
$
434

 
$
190

 
$
—

(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of property funds and trusts holding direct real estate investments.
(4)
Consists of limited partnerships, private equity, and hedge funds.
 
 
 
Fair Value Measurements Using
Asset Category
Balance at December 31, 2018
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Cash and cash equivalents (1)
$
130

 
$
130

 
$
—

 
$
—

Equity investments:
 
 

 

 

Equity securities
384

 
384

 
—

 
—

Equity derivatives
(14
)
 
—

 
(14
)
 
—

Pooled funds (2)
285

 
—

 
—

 
—

Fixed income investments:
 
 

 

 

Corporate bonds
111

 
—

 
111

 
—

Government and agency bonds
126

 
95

 
31

 
—

Asset-backed securities
2

 
—

 
2

 
—

Pooled funds (2)
417

 
—

 
—

 
—

Other investments:
 
 

 

 

Real estate and REITs (3)
78

 
78

 
—

 
—

Alternative investments (2) (4)
277

 
—

 
—

 
—

Total
$
1,796

 
$
687

 
$
130

 
$
—

(1)
Consists of cash and institutional short-term investment funds.
(2)
Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3)
Consists of exchange traded real estate investment trusts (“REITs”).
(4)
Consists of limited partnerships, private equity, and hedge funds.
Changes in the Level 3 fair-value category
The following table presents the changes in the Level 3 fair-value category in the Company’s U.K. pension plans for the years ended December 31, 2019 and December 31, 2018 (in millions):
Fair Value Measurements Using Level 3 Inputs
Annuities
Balance at January 1, 2018
$
1,909

Actual return on plan assets:
 
Relating to assets still held at December 31, 2018
(122
)
Purchases, sales and settlements—net
7

Foreign exchange
(106
)
Balance at December 31, 2018
1,688

Actual return on plan assets:
 
Relating to assets still held at December 31, 2019
113

Foreign exchange
48

Balance at December 31, 2019
$
1,849


Estimated Future Benefit Payments
Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2019 (in millions):
 
 
U.K.
 
U.S.
 
Other
2020
 
$
164

 
$
186

 
$
43

2021
 
$
154

 
$
190

 
$
44

2022
 
$
160

 
$
192

 
$
46

2023
 
$
167

 
$
189

 
$
46

2024
 
$
172

 
$
181

 
$
47

2025 – 2029
 
$
913

 
$
887

 
$
252


Other information related to the Company's other post-retirement benefit plans
Other information related to the Company’s other postretirement benefit plans are as follows:
2019

2018

2017
Net periodic benefit cost recognized (millions)
$3

$3

$1
Weighted-average discount rate used to determine future benefit obligations
2.93 - 3.25%

3.91 - 4.26%

3.32 - 3.64%
Weighted-average discount rate used to determine net periodic benefit costs
3.91 - 4.26%

3.32 - 3.64%

3.71 - 4.15%